March 29 (Bloomberg) -- Brazil’s Senate gave final approval
yesterday to a bill that seeks to gradually eliminate the
country’s pension deficit by limiting government payments to
3,916 reais ($2,144) per month to retired public workers.

To receive more, public workers must make contributions to
individual retirement accounts created by the law, with the
government’s matching contributions limited to 8.5 percent of
the amount by which each employee’s salary exceeds the pension
ceiling.

“It’s a positive measure in the medium and long term,”
said Flavio Serrano, senior economist at Espirito Santo
Investment Bank. “It reduces pressure on public accounts mainly
because pension payments, in the current system, are a burden to
government and to society,” he said in a telephone interview
from Sao Paulo.

Retired government workers now receive 80 percent of their
average salary of their last decade of employment. Brazil racked
up a 34.6 billion-real deficit last year to cover the pensions
of 949,000 retired civil servants, compared with a 36.5 billion-real deficit for 29 million citizens receiving social security,
according to a Finance Ministry statement presented to
lawmakers.

To contact the reporters responsible for this story:
Maria Luiza Rabello in Brasilia at
mrabello@bloomberg.net;